Day Trading: Day traders rapidly buy and sell stocks throughout the day in the hope that their stocks will continue climbing or falling in value for the seconds to minutes they own the stock, allowing them to lock in quick profits. Day trading is extremely risky and can result in substantial financial losses in a very short period of time.

Day Trading for a Living
There are two primary divisions of professional day traders: those who work alone and/or those who work for a larger institution.

Most day traders who trade for a living work for a large institution. The fact is these people have access to things individual traders could only dream of: a direct line to a dealing desk, large amounts of capital and leverage, expensive analytical software and much more. These traders are typically the ones looking for easy profits that can be made from arbitrage opportunities and news events. The resources to which they have access allow them to capitalize on these less risky day trades before individual traders can react.

Individual traders often manage other people's money or simply trade with their own. Few of them have access to a dealing desk; however, they often have strong ties to a brokerage (due to the large amounts of commission spending) and access to other resources. However, the limited scope of these resources prevents them from competing directly with institutional day traders; instead, they are forced to take more risks. Individual traders typically day trade using technical analysis and swing trades - combined with some leverage - to generate adequate profits on such small price movements in highly liquid stocks.

Day traders spend their time at computer screens, quickly buying and selling investments within a single day - sometimes within just a few hours or minutes - and reacting to continual market swings. They trade in the hope that their investments will soar in value in the short time they hold them, and net them quick profits. Often they use computerized systems or advisory services that claim to be able to predict the markets.

No doubt about it, this is a risky business. Despite the picture of investing success painted by some day trading companies' ads, far more day traders lose money than make it. Some traders lose big, forfeiting their student loan money, second mortgages or retirement funds. In addition, people who trade on margin or sell short risk losing much more than their investment.

Every time investors make a trade, they pay a commission. That's true whether they buy or sell and whether they make money or lose their shirt.